Life Insurance and Medical History Facts That You Don't Know

04/28/2017 11:37 am ET

You know you need life insurance to financially protect your family and loved ones. But you're worried about passing a physical exam or that your family's medical history means you'll have to pay too much for coverage.

Maybe your father and grandfather both died young from heart attacks? Or your mother and her mother both battled cancer? Could this history of family medical problems cause your policy rates to skyrocket?

A spotty family medical history might have less impact than what you think on what you pay for life insurance. And a family history of cancer, high blood pressure, heart attacks and other medical conditions certainly doesn't mean that you'll struggle to find a solid life insurance policy.

What questions to expect at your physical exam

Family health history can be influential when it comes to life insurance premiums, but never lie or feel you need to keep quiet about something in your family's past.

Your family's medical history "won't keep you from getting coverage, assuming you are relatively healthy," says Scott Cody, a financial planner with Latitude Financial Group in Denver, Colorado.

"What it can do is keep you from getting perhaps the best or highest health rating."

The bottom line? A lower health rating means that you might pay up to 20 percent more for your coverage, Cody says. But again, this assumes that you’d qualify for the highest health rating from your life insurer anyway, and that’s often not the case.

When you apply for what is known as a fully underwritten life insurance policy — one that requires you to take a physical, give a blood sample and provide a urine sample — you'll also be asked a series of questions from your insurance provider. Some of these will cover your family's health history.

Cody says that most insurance providers will ask whether any of your immediate relatives have had cancer or suffered heart attacks before they reached the age of 60 or 65.

It’s important to note, though, that insurance companies will only ask about your immediate blood relatives: father, mother and siblings.

Tammy Johnston, president and chief executive officer of The Financial Guides in Alberta, Canada, says insurers won’t focus on grandparents, cousins and great-grandparents.

What insurers definitely care about is when a health problem or death occurred.

“If your dad had a heart attack at 68, that would cause few problems with insurers,” Johnston says. “If he had it before 45, that would mean big problems. If both mom and dad had heart attacks, that would be bad. If only one parent had a heart attack, the impact might not be as severe.”

The same type of reasoning holds true for a family history of cancer. Insurers will look at how much a family history of cancer can be attributed to genetics and how much to lifestyle choices.

For instance, if your mother developed lung cancer because she smoked a pack of cigarettes a day, your insurer might not ding you if you are a non-smoker.

What family health issues do insurers consider?

If you're worried about the health history of your immediate blood relatives, you do have an option: You can apply for life insurance that doesn't require a medical exam or bloodwork. These policies often cost more because insurers are taking on more risk by not getting a full medical history of consumers.

But those consumers who worry that they have high cholesterol or other health issues might choose insurance that doesn't require these medical exams.

Even if you are applying for a fully underwritten policy, your family's previous health issues might not hurt you in the form of higher premiums. Anthony Martin, owner of insurance agency Choice Mutual in Citrus Heights, California, says that insurers only care about some family health issues. Others won't have any impact on your policy premium.

"Life insurance companies only care if you have immediate family members who passed away prior to age 65 from cancer, coronary artery disease or cardiovascular disease," Martin says. "Very rarely will they ask about other health conditions."

Your health and qualifying for life insurance

Even if you do have family members who died from one of these health issues and you do want fully underwritten life insurance, you might still not pay a higher premium than you would have had your relatives all been healthy and lived long lives.

That's because life insurers rely on different health ratings when assigning policy premiums. The healthiest of candidates fall into the Preferred Plus rating, while the next healthiest group are considered Preferred. Insurers might also use ratings such as Standard Plus and Standard, in addition to ratings for those in poorer health.

Martin says that if you are extremely healthy and would have qualified for a rating of Preferred or Preferred Plus, then, yes, a history of serious health problems among immediate family members could hurt. Even with your exceptional health, you might qualify for a lower health rating because of this family history.

"In most cases, Standard would be the best you could qualify for given a family member who passed away due to the noted health issues," Martin says.

If you are still worried about family health issues, there are steps you can take.

Johnston recommends you work with an independent insurance broker, one who doesn’t work with one insurance company. This broker can search for the best rates for your particular situation.

Secondly, she says you need to paint a picture for insurance companies. Maybe your father did die of a heart attack at 50. But you might point out that he was overweight, never exercised and always suffered from high blood pressure. If you don’t smoke, are a healthy weight and exercise regularly, an insurer might not hit you as hard.

“If you can paint a favorable, but honest picture, that really goes a long way,” Johnston says.

Laura Adams is a personal finance expert, award-winning author, host of the top-rated Money Girl Podcast, and insuranceQuotes’ senior analyst. Join a growing group of thousands who are taking their finances to the next level in her freeDominate Your Dollarsprivate Facebook group.